Spire Forecasts the Next Big Things

Spire Research & Consulting predicts key trends that will dominate Asian business news in 2008. They include the rise of environmental industries in China, the future of E-waste recycling, marketing to the elderly and the propagation of social media.

SPIRE Research and Consulting Project Management Director Koh Ee Mei said: “The marketing landscape in 2008 will see innovation defined primarily by three broad themes: environmentalism, aging and social networking.”

Environmental Industries in China ride the Olympic tide

The 2008 Beijing Olympics poses significant business and political opportunities for China. One dimension of this is China’s concern over the environment and its eagerness to showcase solutions to environmental problems. Riding this wave are environment-related industries eager to display their products.

There can be no doubt that the Beijing authorities are cleaning up their city in preparation for the biggest international sporting event of the nation’s history. The 2008 Beijing Olympics will be held with a focus on being green and this is expected to have spill-over effects to the rest of China.

Beijing has already spent between US$35 billion and US$40 billion on infrastructure and environmental improvements.

Recent measures include:-

building 14 wastewater treatment facilities ahead of the games, with the intention of achieving a 90-percent treatment rate in Beijing and nearby towns

engineering solar power into Olympic venue designs - solar power panels were built in the “bird-nest stadium”

planting trees inside the city to improve air quality

closing 1,000 small coal mines ahead of the Olympics; various sources say the city may also attempt to limit production at coal-fired power plants in surrounding towns

replacing coal-burning boilers within the city with natural gas-fired boilers

banning cars traveling into the city during the period of the games, to curb air pollution

Even though many of these are stop-gap measures, the continuing efforts of the Chinese government to solve the country’s environmental problems are being noticed. The Olympics will be a catalyst for more of such government action across China in 2008. Earlier in 2007, the Chinese government pledged to reduce energy consumption per unit of GDP by 20 percent and emission of major pollutants by 10 percent by 2010.

Businesses which stand to benefit include suppliers of:

Waste water treatment technology

Solar energy technology (China currently accounts for the bulk of solarpowered water heaters in homes)

Air pollution control technology for coal-fired power stations (which account for over 70% of China’s electricity generation) e.g. ultra-supercritical technologies that have been adopted in the new coal-fired power stations in Zhejiang Province

The Future of Mandatory E-waste Recycling

Spire believes that with the increasing volume of E-waste and rising environmental concerns globally, legislation mandating E-waste recycling is on the horizon for Asia.

Asia discards an estimated 12 million tons of e-waste each year; an estimated 20 to 50 million tons of electronic products are discarded globally

Reduced lifespan of electronics

According to the US National Safety Council, the average lifespan of a PC has shrunk from four or five years to only two years now, due to technological advances and a more competitive electronics industry.

In Asia, the e-waste problem is compounded by illegal e-waste dumping from developed countries to take advantage of lower recycling costs in Asia.

Currently, China and India face the biggest e-waste problems in Asia. In 2006, an estimated 115,200 tons of e-waste will be produced in Beijing alone and by 2010, the e-waste volume is expected rise to 158,300 tons. India is fast emerging as the world’s capital for e-waste. New Delhi is now becoming the hub of waste recycling and it receives around 70% of the e-waste generated in the developed world.

Only 16 countries have legislated mandatory take-back for electronic products. In Asia, South Korea and Japan have implemented legislation to minimize the e-waste volumes going to landfills, modeled on EU directives such as the Waste from Electrical and Electronic Equipment (WEEE) and Restriction on the uses of certain Hazardous Substances in electrical and electronic equipment (RoHs) directives. Manufacturers are now responsible for recycling e-waste through the Extended Producer Responsibility policy.

In the near future, directives for e-waste are expected to become more prevalent in Asia. Governments would play more active roles to help establish the necessary recycling infrastructure to develop the e-waste recycling industry. The cross-boundary exports of hazardous wastes are also likely to be more clearly regulated and more specific standards and quantitative guidelines imposed.

Within the next five years (2007-2011), it is expected that compulsory take-back laws would be extended to more than 30 countries worldwide. The pace of legislative change will be divergent, based on the state of economic development and progressive politics in each country.

Japan, South Korea, Taiwan, Australia and New Zealand are likely to lead the region in pushing the boundaries of recycling legislation and imposing more stringent regulations.

Emerging economies, on the other hand, are likely to adapt best practices from other countries.

It is likely that Asia will move towards a harmonized regional framework relating to ewaste management in the longer-term. A common framework would help to promote cooperation on recycling technology development and to address the problems of disguised trade, illegal dumping and unsuitable disposal within the region. Harmonization of e-waste legislation would also help multinational companies that currently have to comply with different recycling requirements in different countries.

Recycling has been identified as one of the most effective methods to minimize the amount of e-waste in Asia. Total global revenues for e-waste recycling were estimated to be USD7.2 billion in 2004 and sales are expected to grow at 8.8% annually to US$ 11 billion in 2009.

More and more businesses are incorporating environmental considerations into their operations and strategies – for example Ricoh’s Comet CircleTM concept and Hewlett Packard’s Planet PartnersTM Programme.

Recycling is presently still very much a fee-for-service business. However, it might develop into a profitable activity such that third party recycling companies may one day pay manufacturers to acquire recyclable products.

Established MNCs, and those that aspire to become established MNCs, are expected to embrace recycling ahead of, and not in reaction to, legislation. More companies are expected to outsource recycling to third party specialists who possess better scale economies and expertise.

Marketing to the Silver-haired Segment

Spire anticipates that more international and local companies in Asia will innovate in addressing the mass-market opportunities created by the baby boomers in Asia.

In 2005, one-fifth of Asia-Pacific’s population was aged 50 or older. By 2050, that figure will be nearly 40%. While Asian countries like India – where 60% of the population is less than 25 years old – have a large youth consumer segment, others such as Hong Kong, South Korea and Singapore have a mushrooming elderly population.

In a recent study of regional companies and their marketing strategies to the elderly, however, Spire found that none of the companies with operations in Singapore saw any urgency to tackle this demographic time bomb. Nearly a third of those without a current Silver Hair strategy intended to implement such strategies in three to five years’ time.

Japan, with one of the highest percentages of the elderly in its population at 21%, was viewed by nearly a third of the companies surveyed as the market with the greatest potential for Silver Hair products and services. This was followed by China, with a quarter of the respondents identifying it as the market with the greatest potential in this space. Clearly, many companies now understand the importance of aging in China, ranking it second only to Japan.

Another interesting finding of the Spire survey was that the internet and the computer are emerging as growing consumer industries for the older population. Even though ICT companies now have few strategies targeting the older population, more than a quarter plan to develop one by 2010. This is in keeping with the trend of older people beginning to value the internet as an information source.

Other industries to note include pharmaceutical and healthcare as well as the tourism sectors.

The silver-haired segment is a traditional cash cow for the pharmaceutical and healthcare industries.

A remarkable 45% of companies interviewed in these two sectors have existing marketing strategies targeting the silver-haired segment and plan to strengthen these efforts.

Hoteliers and tour agencies report a significant increase in older tourists that travel in groups and have catered packages especially for them.

The reasons were that the older population have more leisure time on their hands are have relatively high disposable incomes from retirement funds.

Social Media Enters the Mobile MarketSocial networking, thanks to the rise of E-communities, has seen an explosion in 2007. Next year, vendors and consumers will take it a notch higher and mobility will be the focus of these platforms.

In 2008, social media and e-communities will allow people to affiliate and connect with like-minded people using the mobile Web, especially in an era where mobile phones are now personal accessories with high involvement and emotional attachment.

Google, Yahoo and AOL have rushed headlong into the mobile market

Google unleashed its AdSense for Mobile, Facebook developed an iPhone application, and MySpace went beta with its mobile platform

Online mobile social media integration would result in brands being afforded the opportunity to engage with a wider audience and involve the audience in their campaigns

About Spire Research and ConsultingSpire Research and Consulting is Asia’s leading strategic market intelligence consultancy. Spire’s competitive advantage lies in its ability to deliver to its clients actionable intelligence on the external business environment in support of their strategic decision-making in marketing and business development. Spire is one of the few companies in its industry to be headquartered in Asia. Spire’s clients include over 20 Fortune 500 organizations as well as Government agencies in ten countries. For more information, visit us at www.spireresearch.com.